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A

PROJECT REPORT ON
“A STUDY ON FINANCIAL INSTRUMENTS”
(TRADITIONAL APPROACH)
SUBMITTED TO
MAHAKAL INSTITUTE OF MANAGEMENT, UJJAIN
TOWARDS
PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSI
NESS ADMINISTRATION (MBA)
OF
VIKRAM UNIVERSITY, UJJAIN (M.P.)
June-July 2010

DECLARATION
I, the undersigned, Rini Jacob hereby declare that the present, summer project t
itle “A Study on Financial instrument” (traditional approach) is based on my origina
l work and my indebtedness to other works, publication, has been duly acknowledg
ed at relevant places.

Signature of the Student:


Rini Jacob

ACKNOWLEDGEMENT

I take this opportunity to express my deep sense of gratitude towards all the pe
rsons who helped me through their guidance and cooperation to complete the proje
ct successfully. It is great privilege and honor to have an opportunity of doing
project at Karvy stock broking limited Ujjain.
First of all I would like to give my sincere thanks to Mr. Bunty Kumar (branch m
anager) for granting me permission to do my training on FINANCIAL INSTRUMENTS (T
RADITIONAL APPROACH). I m very grateful to my project guide for his generous gui
dance and giving full co-operation to me despite their hectic schedule. .
I express my sincere gratitude to all persons who gave me guidance and help for
conducting this study.

CONTENTS
A. General training:
Introduction
History of the organisation
Mission and vision of Karvy
Organisational structure
Karvy group
Services offered by Karvy group
Achievements of Karvy group
SWOT analysis
B. Special project undertaken:
Chapter 1: introduction
Chapter 2: Research methodology
Introduction to the project
a) The study and objectives
b) Sample
c) Tools
• Data collection
• Data analysis

Chapter 3: results and interpretation of results


Chapter 4: suggestion and conclusion
Appendices
Bibliography

INTRODUCTION
Karvy is a premier integrated financial services provider and ranked among the t
op five in the country in all its business segments. It services over 16 million
individual investors in various capacities and provides investor services to ov
er 300 corporate, comprising who is who of Corporate India.
It is a member of all three:-

National Stock Exchange (NSE)


Bombay Stock Exchange (BSE)
Hyderabad Stock Exchange (HSE)

Karvy utilized its experience and superlative expertise to capitalize on its str
engths and better its services, innovate and provide new ones. It’s diversified in
the process and thus evolved as India’s premier integrated financial services ent
erprise.
Karvy has been a customer centric company since its inception. It offers a singl
e platform servicing multiple financial instruments in its bid to offer complete
financial solution to the varying needs of both corporate and retail investors,
where and extensive range of services are provided with great volume- managemen
t capability.
Karvy covers the entire spectrum of financial services such as stock broking, de
pository, participants, distribution of financial product- mutual funds, bonds,
fixed deposit, equities, insurance broking, commodities broking, personal financ
e advisory services, merchant banking & corporate finance, placement of equity,
IPOs, among others.

HISTORY OF ORGANIZATION
Karvy was started by a group of five chartered accountants in 1979. The partners
decided to offer, other than the audit services, value added services like corp
orate advisory services to their clients. The first firm in the group, Karvy Con
sultants Limited was incorporated on 23rd July, 1983. In a very short period, it
became the largest Registrar and Transfer Agent in India. This business was spu
n off to form a separate joint venture with Computershare of Australia, in 2005.
Karvy’s foray into stock broking began with marketing IPOs, in 1993. Within a few
years, Karvy began topping the IPO procurement league tables and it has consist
ently maintained its position among the top 5. Karvy was among the first few mem
bers of National Stock Exchange, in 1994 and became a member of The Stock Exchan
ge, Mumbai in 2001. Dematerialization of shares gathered pace in mid-90s and Kar
vy was in the forefront educating investors on the advantages of dematerializing
their shares. Today Karvy is among the top 5 Depositary Participant in India.
While the registry business is a 50:50 Joint Venture with Computershare of Austr
alia, we have equity participation by ICICI Ventures Limited and Barings Asia Li
mited, in Karvy Stock Broking Limited. For a snapshot of our organization struct
ure, please click here.
Karvy has always believed in adding value to services it offers to clients. A to
p-notch research team based in Mumbai and Hyderabad supports its employees to ad
vise clients on their investment needs. With the information overload today, Kar
vy’s team of analysts help investors make the right calls, be it equities, mf, ins
urance. On a typical working day Karvy:
• Has more than 25,000 investors visiting our 575 offices.
• Publishes / broadcasts at least 50 buy / sell calls
• Attends to 10,000+ telephone calls
• Mails 25,000 envelopes, containing Annual Reports, dividend cheques / advises, a
llotment / refund advises
• Executes 150,000+ trades on NSE / BSE
• Executes 50,000 debit / credit in the depositary accounts
MISSION AND VISION OF KARVY
MISSION STATEMENT OF KARVY:
An organization exists to accomplish something or achieve something. The mission
statement indicates what an organization wants to achieve .Karvy’s mission statem
ent is “TO BRING INDUSTRY, FINANCE AND PEOPLE TOGETHER”
Karvy act as an intermediary between industry and people. It work as an investme
nt advisor and helps people to invest their money ,same way Karvy helps industry
in achieving finance from people by issuing shares,debentures,bonds,mutual fund
s, fixed deposits.

VISION OF KARVY:
Company’s vision is crystal clear and mind frame very directed.”To be pioneering fin
ancial services company and continue to grow at a healthy pace, year after year,
decade after decade. Company foray into IT- enabled services and internet busin
ess has provided an opportunity to explore new frontiers and business solution;
to build a corporate that sets benchmark for others to follow.

ORGANIZATIONAL STRUCTURE

KARVY GROUP
Karvy has travelled the success route, towards building a reputation as an integ
rated financial service provider, offering a wide spectrum of services for over
20 years.
Karvy, a name long committed to service at its best. A fame acquired through the
range of corporate and retail services including merchant banking, mutual funds
, fixed income, equity investments, insurance, commodities to name a few. Our v
alues and vision of attaining total competence in our servicing has served as a
building block for creating a large financial enterprise.
The Karvy group of companies are:
Karvy stock broking ltd.:

A member of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and Hy
derabad Stock Exchange (HSE) offers a comprehensive range of services in the sto
ck market through the benefits of in-depth research on crucial market dynamics,
done by qualified team of experts. The company offers solutions that encompass a
wide spectrum of financial services/products.
1. Karvy Comtrade ltd.:

The company provides investment, advisory and brokerage services in Indian Commo
dities Markets. And most importantly, we offer a wide reach through our branch n
etwork of over 530 branches located across
390 cities.
2. Karvy insurance broking ltd.:

The company provides life and non-life insurance products to retail individuals,
high net worth clients and corporate. A major step towards being the most compr
ehensive personal finance advisor.

3. Karvy investors services ltd.:

Registered with SEBI as a Category I Merchant Banker and ranked among the top 10
merchant bankers in the country, the company has built a reputation as a profes
sional advisor in structuring IPO’s take over assignments and buy back exercises.
4. Karvy Computershare private ltd:

Karvy Computershare Private Limited is a joint venture between Computershare, Au


stralia and Karvy Consultants Limited - The first securities registry company to
receive ISO 9002 certification in India. Registered with SEBI as Category I Reg
istrar, is Number 1 Registrar in the country. Computershare, Australia, services
more than 75 million shareholders across 7000 corporate clients and makes its p
resence felt in over 12 countries across 5 continents.
KARVY is working as Capital Market Intermediaries. Stockbrokers are regulated by
SEBI [Stock-brokers and Sub-brokers] Regulations, 192. The stockbroker is a mem
ber of the stock exchange. Stockbrokers are the intermediaries who are allowed t
o trade in securities
SERVICES OFFERED BY KARVY
1) DEMAT Services:
Karvy is a depository participant with the national securities depository limite
d (NSDL) for trading and settlement of dematerialised shares.
Depository participant are described as an agent of depository. They are interme
diaries between the depositors and the investors. They can offer these services
only after obtaining a certificate of registration from SEBI.
2) Registrar and transfer agent:
In 1985, Karvy entered the registrar and share transfer business. Karvy has been
rated as India’s most admired registrar.
3) Investment product distribution:
Karvy is concerned with distribution of investment products like:
• Fixed deposits
• Bonds
• IPO
a) Fixed deposits:
Karvy is a dealer of 34 fixed deposit companies which includes companies from pu
blic sector, Non –banking finance companies, Housing finance companies and Manufac
turing companies.

b) Bonds :
Karvy deals with bonds from RBI saving bonds, NHB and REC.
c) IPO:
Karvy also provides services related to IPO (Initial public offer).Recently Karv
y released the IPO of SKS Microfinance.
4) Investment advisory services:
Karvy also provides investment advisory services.i.e, portfolio management servi
ces to high net worth individuals and corporate. It guides its investors to inve
st in right kind of funds for better return to its investors.
5) Merchant banking:
Merchant banking is a financial intermediation that matches entities that need c
apital and those that have capital. Hence they facilitate the flow of capital in
the market.
Karvy enjoys SEBI category I for merchant banking. Karvy offers the full spectru
m of merchant banking service beginning from identity the best time for an issue
to final stage of marketing.
6) Insurance:
Karvy is also a dealer of many private life insurance companies. At Ujjain branc
h, it is associated with the dealing of following companies like Tata AIG, Max B
UPA and the like.
7) Mutual fund services:
Karvy provides services to nearly 80% of the asset management services (AMC) acr
oss an extensive network of service centres with asset under service in excess o
f Rs.10, 000 crores.
8) Income tax enabled services:
Karvy provide income tax enabled services. It works as a TIN Facilitation centre
and provides the following services:
• Distribution of PAN Cards (Permanent account number).
• Distribution of TAN Cards ()

ACHIEVEMENTS OF KARVY
• Largest mobilizer of funds as per PRIME DATABASE.
• First ISO-9002 certified registrar in India.
• A category –I Merchant banking.
• A category – I Registrar to public issues.
• Ranked as “The most admired registrar” by MARG.
• Handled the largest ever public issue- IDBI.
• Handled over 500 public issues as registrar.
• Handling the Reliance accounts which accounts for nearly 10 million account hold
ers.
• First depository participant from Andhra Pradesh.

SWOT ANALYSIS
Strength:
• No.1 registrar and transfer agent of companies
• Strong communication network
• Employees are highly empowered.
Weakness:
• High employee turnover.
Opportunities
• Need to explore the rural and semi urban areas.
Threats:
• Increasing number of local players.

INTRODUCTION
FINANCIAL INSTRUMENTS:
In simple terms Financial Instrument is either cash; evidence of an ownership in
an entity or a contractual right to receive or deliver, cash or another financi
al instruments.
Financial Instruments are legal documents that embody monetary value. There are
a number of different types of documents that are properly identified as financi
al instruments. In today s financial marketplace, financial instruments can be
classified generally as equity based, representing ownership of the asset, or de
bt based, representing a loan made by an investor to the owner of the asset. For
eign exchange instruments comprise a third, unique type of instrument
They are broadly categorized under two heads. They are as follow:
TYPES OF FINANCIAL INSTRUMENTS
Financial instruments are broadly categorised under two heads they are as follow
:
• Cash instruments:
This type of financial instrument is simply those documents that are recognized
as cash that can be utilized for various transactions.
Currency is the most easily identified of all cash instruments, although such do
cuments as checks or funds transfers from bank accounts would also be understood
to be a financial instrument of this type.
• Derivative instruments:
In broad terms, a derivative instrument is some type of contract that has value
based on the current status of the underlying assets.
This classification would include such instruments as future options, and swaps.
Some analysts also prefer to include stocks, bonds, and currency future within
this category.

FINANCIAL INSTRUMENTS (TRADITIONAL APPROACH)


We have seen the two categories of financial instruments. Now let us see the app
roaches of financial instruments. The approaches to financial instruments are:
• Traditional approach.
• Modern approach.
The traditional approach to financial instruments includes the traditional instr
uments which have been in the financial market for a long time. The financial in
struments taken into account are as follow:
• Insurance.
• Fixed deposits.
• Bonds.
• Kisan Vikas Patra.
• National saving certificates

INSURANCE
Insurance, in law and economics, is a form of risk management primarily used to
hedge against the risk of a contingent loss. Insurance is defined as the equitab
le transfer of the risk of a potential loss, from one entity to another, in exch
ange for a premium.
Insurer, in economics, is the company that sells the insurance.
Insurance rate is a factor used to determine the amount, called the premium, to
be charged for a certain amount of insurance coverage. Risk management, the prac
tice of appraising and controlling risk, has evolved as a discrete field of stud
y and practice.
SUM ASSURED:
It is the amount of money an insurance policy guarantees to pay before any bonus
es are added.
Factors included in the calculation of sum assured are:

• Date of birth.
• Gender.
• Duration.
• Health conditions.
• Job profile.

LIFE INSURANCE:
All policies are not the same. Some give coverage for your lifetime and others c
over you for a specific number of years.
Following are the different types of life insurances:
• Whole life
• Term policy
• Money back
• Endowment
• Pension plan
• ULIP
GENERAL INSURANCE:
General insurance typically comprises any insurance that is not determined to be
life insurance. It is called property and casualty (P&C) insurance in the U.S.
General insurance policies, including automobile, accidents and homeowner’s polici
es, provide payments depending on the loss from a particular financial event.

INSURANCE PRODUCT WITH WHICH WE DEALT AT KARVY:


• MAHA LIFE GOLD (TATA AIG).

MAHA LIFE GOLD (TATA AIG):


THE WHOLE LIFE PLAN

ABOUT TATA AIG:


Tata AIG Life Insurance Company Limited and Tata AIG General Insurance Company L
imited (collectively Tata AIG ) are joint ventures of the Tata Group and Americ
an International Group, Inc. (AIG). Tata AIG combines the strength and integrity
of the Tata Group with AIG s international expertise and financial strength.
• A joint venture between the Tata Group and American International Group
• Licensed to Sell: Feb 2001
• Started Operation: Apr 2001
• Head Office: Mumbai
• Accounting Year: April – March
• performance Year: April – March
• Percentage of Company Holdings = AIG – 26
As Tata AIG Life grew, the logo evolved to represent its
Commitment to customers and its focus on path breaking products
To meet customer needs.
This gave birth to a New Corporate Identity A new look at life‘

ABOUT PRODUCT:
TERMS:
Term mean the time period of policy and Maha life gold of Tata AIG for year.

1* 5* 6* 10* 11*
15*
*= YEARS
SUM ASSURED: 1 lack – no limit
AGE CRITERIA: 0 to 60
PREMIUM RATES (Rs.1, 00,000.)
FOR INDICATED SUM ASSURED
ISSUE
AGE ANNUAL SEMI
ANNUAL
0-35 9150 4667
36-45 9200 4692
46-50 9250 4718
51-55 9300 4743
56 9428 4808
57 9508 4849
58 9603 4898
59 9699 4964
60 9836 5016

1 2 3 4
1ST YEAR – 5TH YEAR =
1ST PREMIUM (for 36-39) = 9,200rs
Total premium in 4year = 9,200*4
Total premium in 4 year = 36,800
6 7 8 9 10
6th year - 10th year =
6th year premium = 9,200
Total premium in 5 year = 9,200*6
Total premium in 5 year = 55,200
After 5 year there is a provision of 3% flexible per annum dividend on sum assur
ed.
Calculation:
= 1,00,000*3/100.
= 3,00,000/100.
= 3,000 PER YEA
TOTAL INTREST IN 6 YEAR=
5TH* 6TH* 7TH* 8TH*
9TH* 10th * 15

* = YEAR
TOTAL INTREST IN 5 YEAR= 18,000
10th year - 15th year =
11th* 12th* 13th* 14th* 15th*

* = YEAR

7th year premium= 9200


Total premium in 5 year = 9200*5
Total premium in 5 year = 46,000

ONWARD 15 YEAR TILL POLICY HOLDER’S DEATH HE RECEIVE


FLEXIBLE INTRESTED: 10%
GURANTEED INTRESTED: 5%
TOTAL: 15%
CALCULATION:
10%
= 1,00,000*10/100
= 1,00,00,00/100
= 10,000rs per year 5%
= 1,00,000*5/100
= 5,00,000/100
= 5,000rs per year
TOTAL= 10,000 + 5,000
= 15,000 Rs
Suppose if Mr A person take a policy when he was 35 year old. His premium is com
pleted at 50 year. After 50 year he was died when he was 80 year old then he was
get…….
TOTAL AMOUNT MR. A RECEIVED
Calculation:

AGE
TOTAL
INVESTMENT
TOTAL
INCOME
35-39 46,000 -
40-45 46,000 18,000
46-50 46,000 55,000
50-80 - 4,50,000
AT THE TIME
OF DEATH 1,00,000
TOTAL
1,38,000
6,30,000
The benefit of this policy that policy holder only have to pay the premium only
for 15 year and he receive benefit for long period of time.

NATIONAL SAVING CERTIFICATE (NSC)


National saving certificates are popularly known as NSC.It is a time tested tax
saving instruments that combines adequate returns with high safety. These certif
icates are available at all post offices across India. . A large chunk of middle
class families use NSCs for saving on their tax, getting double benefits. They
not only save tax on their hard-earned income but also make an investment which
is sure to give good and safe returns.
FEATURES OF NATIONAL SAVING CERTIFICATE:
How to invest:
One can invest in any head post office/sub post office.
Who can invest:
• An adult in his own name or on behalf of a minor,
• A trust,
• Two adults jointly.
Minimum Purchase Value:
The minimum amount of investment under NSC is Rs 100/-

Maturity of National Savings Certificate:


Period of maturity of a certificate is six Years.

Nomination / Transferability:
• Nomination facility is available.
• Certificates can be transferred from one post office to any other post office.
• Transfer from one person to another person permissible in certain conditions.
Denomination :
• Certificates are available in denominations (face value) of Rs. 100, Rs.500, Rs.
1000, Rs. 5000 & Rs. 10,000.
Interest/maturity value :
• Interest is available on this scheme @ 8%, compounded half-yearly
• Interest accrued on the certificates every year is liable to income tax but deem
ed to have been reinvested.
Income Tax relief :
• Income Tax rebate is available on the amount invested and interest accruing ever
y
year under Section 88 of Income tax Act, as amended from time to time. [under Se
c 80C]
• Income tax relief is also available on the interest earned as per limits fixed v
ied section 80L of Income Tax, as amended from time to time.

KISAN VIKAS PATRA


Kisan Vikas Patra (KVP) is a saving instrument that provides interest income sim
ilar to bonds. Amount invested in Kisan Vikas Patra doubles on maturity after 8
years & 7 months. Some people have a misconception that only a farmer can invest
money in Kisan Vikas Patra. However, it is absolutely false. Anyone wishing to
invest money at safe places can go for Kisan Vikas Patra.
FEATURES OF KISAN VIKAS PATRA:
How to invest:
It is an easy way to invest in KVP.One can invest in any head post office/sub po
st office in cash, demand draft or local cheques.
Who can invest:
• An adult in his own name or on behalf of a minor,
• A trust,
• Two adults jointly.
Denominations:
Kisan Vikas Patra is available in the denominations of Rs 100, Rs 500, Rs 1000,
Rs 5000, Rs. 10,000 and Rs. 50,000. There is no maximum limit on purchase of KVP
s.
Who is not Eligible:
• Commercial Companies and institutions are not eligible to purchase KVP.
• NRIs and Hindu Undivided Families cannot purchase Kisan Vikas Patra.
Maturity:
• Facility of reinvestment on maturity.
• Maturity proceeds which are not drawn are eligible for Post office Savings accou
nt interest for a maximum period of two years.
Nomination/transferability:
• KVPs are transferable to any Post office in India.
• KVPs can be transferable from one person to another person before maturity.
• Nomination Facility is available in case of KVPs
Income tax relief:
No income tax benefits available are under KVPs.

BONDS
Meaning of Bonds:
A Bond is a debt security. When you purchase a bond, you are lending money to a
government, municipality, corporation, federal agency or other entity known as “is
suer”.
In return for that money ,the issuer provides you with a bond in which it promis
es to pay a specified rate of interest during the life of the bond and to repay
the face value of the bond (the principal)when it matures or comes due.
Bonds provide the borrower with external funds to finance long-term investments
, or, in the case of government bonds, to finance current expenditure. Certifica
tes of deposit (CDs) or commercial paper are considered to be money market instr
uments and not bonds. Bonds must be repaid at fixed intervals over a period of t
ime.

Features of Bonds:
Nominal, principal or face amount:
The principal is the amount at which issuer pays interest and which, most common
ly, has to be repaid at the end of the term.
Issue price:
Issue price is the price at which investors buy the bonds when they are first is
sued, which will typically be approximately equal to the nominal amount.
Maturity date:
The date on which the issuer has to repay the nominal amount. As long as all pay
ments have been made, the issuer has no more obligations to the bond holders aft
er the maturity date.
• Short term (bills): maturities up to one year.
• Medium term (notes): maturities between one and ten years.
• Long term (bonds): maturities greater than ten years.
coupon :
The interest rate at which the issuer pays to the bond holders. Usually this rat
e is fixed throughout the life of the bond.
Coupon dates:
The dates on which the issuer pays the coupon to the bond holders. In the U.S. a
nd also in the U.K. and Europe, most bonds are semi-annual, which means that the
y pay a coupon every six months.

FIXED DEPOSITS
WHAT IS A FIXED DEPOSIT?
A fixed deposit is meant for those investors who want to deposit a lump sum of m
oney for a fixed period; say for a minimum period of 15 days to five years and a
bove, thereby earning a higher rate of interest in return. Investor gets a lump
sum (principal + interest) at the maturity of the deposit.
Bank fixed deposits are one of the most common savings scheme open to an average
investor. Fixed deposits also give a higher rate of interest than a savings ban
k account. The facilities vary from bank to bank. Some of the facilities offere
d by banks are overdraft (loan) facility on the amount deposited, premature with
drawal before maturity period (which involves a loss of interest) etc. Bank depo
sits are fairly safer because banks are subject to control of the Reserve Bank o
f India.
FEATRURES OF FIXED DEPOSITS:
Bank deposits are fairly safe because banks are subject to control of the Reserv
e Bank of India (RBI) with regard to several policy and operational parameters.
The banks are free to offer varying interests in fixed deposits of different mat
urities. Interest is compounded once a quarter, leading to a somewhat higher eff
ective rate.
Minimum deposits:
The minimum deposit amount varies with each bank. It can range from as low as Rs
. 100 to an unlimited amount with some banks.
How to apply?
One can get a bank FD at any bank, be it nationalised, private, or foreign. You
have to open a FD account with the bank, and make the deposit. However, some ban
ks insist that you maintain a saving account.
Returns:
The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, d
epending on the maturity period (duration) of the FD and the amount invested

Duration Interest rate (%) per annum


15-30 days 4 -5 %
30-45 days 4.25-5 %
46-90 days 4.75--5.5 %
91-180 days 5.5-6.5 %
181-365 days 5.75-6.5 %
1-2 years 6-8 %
2-3 years 6.25-8 %
3-5 years 6.75-8

INTRODUCTION TO THE PROJECT


A. Study and its objectives:
The project undertaken by me for the Karvy stock broking ltd. laid emphasis on f
inancial instruments with a special reference to traditional approach.
This project has been helpful in understanding the perception of investors. As t
he research which was b conducted helped me to interact with various investors f
rom different backgrounds.
The objectives of the study are as follow:
• To know the perception of investors towards the traditional financial instrument
s.
• Lead generation i.e., to identify potential clients.
• To find and analyze the market position of Karvy stock broking ltd. and their co
mpetitors in the Ujjain region.
• To find out the level of customer satisfaction of its customers.

B.The Sample:
In the project “Financial instruments (traditional approach), I have used “Pr
obability Sampling”. Probability sampling is also known as random sampling.
Sample size: 70 respondents
Sampling period: June 22, 2010 to august 3, 2010.
Sample place: Ujjain city.
As keeping in mind the objective of the study the sample size and sampling techn
ique was selected. Under this sampling technique, it was possible to include var
ious groups of investors within the limited span of time. Secondly it gave me am
ple opportunity to identify the potential customers for the company.
C. The tools:
1. For data collection
The task of data collection begins after a research problem has been defined pro
perly. I have used “Survey method” to collect the data.
I have used “structured questionnaire” for gathering information through contacting
respondent personally. Multiple choice questions are asked in the questionnaire
for data collection.
2. Data analysis
Data analysis is based on the data collected by way of questionnaire.

Name Address Phone No


JAWAHAR SANMUKHANI vinayak traders Ujjain 9406850540 - 0734-2564040
RUPCHAND SANDANI GOPAL AGENCY 9425431270/07342553020
RAMESH KUMAR TRIVENI MARKETING 9301625807/07342559967
RAMESH JAIN SURESH TRADERS 9407158041/07342554651
RAJENDRA AGRWAL SANJAY TREADING 9300613923/07342559870
LALCHAND JAIN M.KALURAM TREDARS 9827077123/07342554457
PARAS JAIN RUCHIN TREDARS 9827431640/07344014665
PRASHANT JAIN VARDHMAN SALES 9425452074/07342558189
SHRI RAM JHAMLANI K.K.INTERPRICE 9425985985/07342558035
PVITR JAIN DHARMESH TREDARS 9827530998/07342553802
RESHABH JAIN RESHABH TREDING 9893012787/07344011474
PUKHRAJ JAIN GANDMAL 9425195874/07342550871
KAMAL GANWAL SARAVGI TREDING 94250891160/07342554777
SATYANARAYAN AREN GURUKRIPA MIL 9425092323/07342561737
LAXMI AGRWAL M/S RAGHUNATH 9827270725/07342553824
MAHESH GOYAL AGRWAL TRADING CO. 9827013880/07344014243
RADHESYAM BHAVSAR SUPARI CENTER 9827227197
SURENDRA AGRWAL KESHAV TREDARS 9425379957/07342558418
VIDHYA JAIN M/R LADDU MAL 9993470939/07344010549
VINOD CHOPRA SINDICAT TREDARS 9893617040/07342552444
MAHENDRA AGRWAL SINGHAL CORPORATIO;N; 9425092362/07342552262
SURESH SUNMUKHANI HERANAND SELES 9827078900/07342553207
ASHOK JAIN ASHOK TEA CENTER 9425092268/07342550268
ARJUN MAHESHWARI YASH INTERPRICE 9827076021/07342554559
RADHARAMAN NAGAR RAMCHANDRA AND CO. 9424830303/07342554546
AMBALAL NAYAK AMBIKA TRADARS 9098800791/073440870006
ANIL AGRWAL M/S ANIL KUMAR 9827588822/07342554961
ABHAY KUMAR JAIN RAJENDRA TREADARS 9425332310/07342553804
ASHOK HARINARAYAN M/S MANGILAL 9424877812/07342555835
BRIJMOHAN RATHI M/S BALKISHAN RATHI 9425918068/07342556282
CHANDRABHAN RAJDEV M/S NANDLAL 9424892074/07342557045
ABDUL SATTAR UNITED TRADERS 9300736082/07342550883
OMPRAKESH AGRWAL OMPRAKESH & CO. 9425918251/07342550710
ARJUNDAS BHIMVANI TULSI TRADERS 990701881/07342550623
ASHOK GARG LAXMI BASEN MIL 9827084155/07342552176
AJAY VADVANI SHANKAR DAL MIL 9907021821/07342553991
AJAY ROHARA A.K.TRADERS 9669999994/07342570179
GHANSYAM DAS M/S NARENDRA KUMAR 9827314814/07342560028
HARISH SANMUKHANI HARISH BROTHERS 9424891861/07342555721
CHAMPAK SIROLIYA CHAMPAK & SANS 9893037770/07344012516
CHANDRA KUMAR GURNANI GANESH TREDARES 9827579969/07342555230
DEEPAK MEDATWAL NAVDEEP AGENCY 9425092127/07342554506
BHAGWAN DAS KUMAR BROTHERS 9425195695/07342551241
DHANRAJ MANGAL MANGAL INDUSTRES 9425458986/07342559657
GURDEEP SINGH SUNEJA M/S MATHURADAS 9329423320/07342552286
HARISH JHAMNANI ROCHA SENG 9926081357/07342552328
JAIN KUMAR CHANDRA TRADING 9425091613/07342552838
JAY KISHAN VASWANI HARIOM TRADERS 9827277820/07342550793
JAY PRAKESH RATHI M/s JAYPRAKESH 9425195934/07342550602
HERALAL JEETVANI M/s TEKCHAND 9425431322/07342552149
LAXMAN VADWANI SIDHI TRADERS 9770017759/07342563990
MANOJ KUMAR TEJWANI MANOJ TRADERS 9893050147/07344060567
SUNIL KUMAR JAIN SHANTI SOBHAGYA 9424014880/07342552299
SHANKAR LAL KARMVANI 9826081361/07342550911
MAHESH MITAL M/s PRMOD KUMAR & CO. 9827080333/2554436
NANAK RAM DIMAND MARKETING 9425094045/07344041404
RAJENDRA KABRA KABRA BROTHERS 9926478725/07344011549
PARAS JAIN KALURAM SUNA 9827082242/07342561040
PRAMOD KANKARIYA POONAM TRADERS 9424879271/07342560821
RAMCHANDRA AHUJA SHEKAR TRADING C. 9425094586/07344040895
SHALENDRA PARMAR BALAJI MARKETING 9827036420/07342551564
SANJAY AGRWAL MYUR TREDERS 9827092911/07342557951
SURESH AGRWAL VISHVAS TRADING 9826817017/07344060181
STAYANARAYAN GUPTA M/s GUPTA ENTERPRICE 9406831133/07342551038
RAMCHANDRA JHAMNANI ANAND TREDERS 9425091288/07342560999
MUKESH SONGRA SHREERAM TEA 9425195746/07342551521
SHELESEH KALVIDIYA H.C.INTERPRICE 9424747474/07342551310
SANJAY AGRWAL SANJAY TRADEING 9826244511/07342552214
SHANKAR LAL M/S HERANAND 9424893394/07344040411
SANJAY GARG R.R.TREDARS 9425094584/07342552704
SUSHIL KAPOOR GURU TRADERS 9407125002/07342555157

RESULTS AND INTERPRETATION


After conducting the research I came to know that Karvy stock broking ltd has a
monopoly in the market as the registrar of the companies in the stock exchange.
The key finding of the study is summarized in the following points:
• The perception of an investor depends on his or her financial position.
• Most of the small businessman is interested in making his or her investments in
insurance sector. While few of them are interested in investing in share market.
• Most of the service class people were found to be interested in insurance and mu
tual funds.
• Nearly about 90 % of respondents like to invest in government companies. Only 10
% of respondents showed interest in private companies.
• Only 40% of respondents were having DE-MAT A/c.
• The motivating factor for an investor, which makes him or her to invest in finan
cial instruments, is profit (return on investment).
• In Ujjain city, Arihant capital is a stiff competitor of Karvy stock broking ltd
.
• Karvy need to focus on marketing as it was found that 15% of the respondents nev
er heard the name of Karvy.

LIMITATIONS
The sample extent for research is only Ujjain city.
Due to limitation of time and cost constraint a sample size of 70 respondents we
re chosen.
Some of the respondents denied furnishing any information.
Q.1.Which investment option you prefer the most?

Data interpretation:
Majority of respondents (43%) prefer insurance as a better option for investment
. While 29% prefer share market as their investment option.11% go for fixed depo
sits, 9%bonds, 6% national saving certificates and 3%respodents go for Kisan Vik
as Patra.

Q.2.What is the purpose of your investment?

Data interpretation:
The basic purpose of an investor is saving. About 43% of the respondents agree t
o this fact. While 29% of respondents go for tax benefits.21% respondents for pr
ofit and 7% for risk cover.

Q.3.Do you invest in share market?


Data interpretation:
Nearly about 57% of the respondents invest in share market. While 43% of the res
pondents don’t want to invest in share market.

Q.4.Do you have a Demat account?

Data interpretation:
In Ujjain, 36% of the respondents have a Demat account. 64% of the respondents d
on’t have a Demat account.

Q.5.In which companies you has your Demat account?

Data interpretation:
50% of the respondents had their Demat account in Karvy stock broking ltd.29% in
Arihant capital and 14% respondents in indo-Thai securities. While the remainin
g 7% in share khan.

Q.6.What is your broking charges?

Data interpretation:
About 43% of the respondents said that they were charged 0.03ps (intraday) and 0
.30ps (delivery).while 57% of the respondents were charged 0.05ps (intraday) and
0.50ps (delivery).
Q.7.Do you know about the annual maintenance charges of your broking firm?

Data interpretation:
It was found that majority of the investors are not aware of the annual maintena
nce charges (64% of respondents).36% of the respondents are aware of their annua
l maintenance charges.

Q.8.Are you satisfied by the services of Karvy stock broking ltd.?

Data interpretation:
79% of the respondents are satisfied by the services rendered by Karvy.21% of th
e respondents are not satisfied by Karvy.

Q.9.In which sector you prefer to invest your money?

Data interpretation:
29%of the respondents prefer to invest in private sector or company. Remaining 7
1% prefer to invest in public sector or company.

Q.10.What is the most important thing that you keep in mind while investing in s
hare market?
Data interpretation:
57% of the respondents keep in mind the risk associated with the investment. Whi
le 43% respondents keep in mind the returns which they will get after investment
.

Q.11.Do you have a medical claim policy?

Data interpretation:
Only 7% of the respondents have medical claim policy. Majority of the respondent
s i.e. 93% of the respondents don’t have medical claim policy.

Q.12.In which companies you has your insurance?

Data interpretation:
In Ujjain 86% of the respondents have LIC insurance plans i.e.LIC is the major p
layer in the insurance sector.9% of the respondents have insurance plans of Baja
j Allianz and 6% respondents have policy of other companies.

Q.13.Do you know about Karvy?

Data interpretation:
About 79% of the respondents know about Karvy.21% of respondents don’t know about
Karvy.

SUGGESTION AND CONCLUSION

There is a high potential market for Karvy stock broking ltd. in Ujjain, but thi
s market needs to be explored as investors (15% of respondents) are unaware of K
arvy stock broking ltd.
In Ujjain, investors have inadequate knowledge about financial instruments, so t
he company needs proper marketing of all their services advertising, distributio
n of pamphlet, arranging seminars etc.
Last but not the least, the point which Karvy should keep in mind is to get invo
lved in aggressive marketing. It has optimum resources and these resources need
to be channelized in a more efficient manner.

QUESTIONNAIRE
Name:
Address:
Age:
Contact no.
Q1.Which investment option you prefer?
Ans.Insurance Share market
Fixed deposits Bonds
National saving certificate Kisan Vikas Patra

Q2.What is the purpose of your investment?


Ans.Saving Tax benefit
Profit Risk cov
er
Q3. Do you invest in share market?
Ans.Yes No

Q4.Do you have a de mat account?


Ans.Yes No
Q5. In which company you have your de mat account?
Ans.Karvy stock broking ltd.
Indo Thai securities
Arihant
Share khan
Q.6.What is your broking charges?
Ans. 0.03-0.30 paisa
0.05-0.50 paisa
Q.7.Do you know about the annual maintenance charges
Your broking firms?
Ans.Yes No
Q.8.Are you satisfied by the services of Karvy stock broking ltd?
Ans.Yes No

Q.9.In which sector you prefer to invest your money?


Ans.Private sector
Public sector
Q.10.What is the most important thing that you keep in mind while investing in s
hare market?
Ans.Risk
Return
Q.11.Do you have a medical claim?
Ans.Yes No
Q.12.In which companies you has your insurance?
Ans. LIC
Baja Allianz
Others
Q.13.Do you know about Karvy?
Ans. Yes
No
BIBLIOGRAPHY
• http://www.karvy.com/v2/aboutus.aspx
• http://www.karvycomputershare.com
• http://www.karvy.com/v2/websites/kisl/registry
• http://www.karvy.com/v2/institutional/broking/aspx
• http://www.thefinapolis.com/v2/bondsFDs/bonds_FDs.asp.
• http://www.karvyglobal.com
• http://www.thefinapolis.com/v2/achievement.asp
• http://en.wikipedia.org/wiki/financial_instrument.
• http://www.investopedia.com/terms/f/financialinstrument.asp
• http://en.wikipedia.org/wiki/insurance
• http://www.investinginbonds.com/learnmore.asp?catid=46&id=2
A
PROJECT REPORT ON
“A STUDY ON FINANCIAL INSTRUMENTS”
(TRADITIONAL APPROACH)
SUBMITTED TO
MAHAKAL INSTITUTE OF MANAGEMENT, UJJAIN
TOWARDS
PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSI
NESS ADMINISTRATION (MBA)
OF
VIKRAM UNIVERSITY, UJJAIN (M.P.)
June-July 2010

DECLARATION
I, the undersigned, Rini Jacob hereby declare that the present, summer project t
itle “A Study on Financial instrument” (traditional approach) is based on my origina
l work and my indebtedness to other works, publication, has been duly acknowledg
ed at relevant places.

Signature of the Student:


Rini Jacob

ACKNOWLEDGEMENT
I take this opportunity to express my deep sense of gratitude towards all the pe
rsons who helped me through their guidance and cooperation to complete the proje
ct successfully. It is great privilege and honor to have an opportunity of doing
project at Karvy stock broking limited Ujjain.
First of all I would like to give my sincere thanks to Mr. Bunty Kumar (branch m
anager) for granting me permission to do my training on FINANCIAL INSTRUMENTS (T
RADITIONAL APPROACH). I m very grateful to my project guide for his generous gui
dance and giving full co-operation to me despite their hectic schedule. .
I express my sincere gratitude to all persons who gave me guidance and help for
conducting this study.

CONTENTS
A. General training:
Introduction
History of the organisation
Mission and vision of Karvy
Organisational structure
Karvy group
Services offered by Karvy group
Achievements of Karvy group
SWOT analysis
B. Special project undertaken:
Chapter 1: introduction
Chapter 2: Research methodology
Introduction to the project
a) The study and objectives
b) Sample
c) Tools
• Data collection
• Data analysis

Chapter 3: results and interpretation of results


Chapter 4: suggestion and conclusion
Appendices
Bibliography

INTRODUCTION
Karvy is a premier integrated financial services provider and ranked among the t
op five in the country in all its business segments. It services over 16 million
individual investors in various capacities and provides investor services to ov
er 300 corporate, comprising who is who of Corporate India.
It is a member of all three:-

National Stock Exchange (NSE)


Bombay Stock Exchange (BSE)
Hyderabad Stock Exchange (HSE)

Karvy utilized its experience and superlative expertise to capitalize on its str
engths and better its services, innovate and provide new ones. It’s diversified in
the process and thus evolved as India’s premier integrated financial services ent
erprise.
Karvy has been a customer centric company since its inception. It offers a singl
e platform servicing multiple financial instruments in its bid to offer complete
financial solution to the varying needs of both corporate and retail investors,
where and extensive range of services are provided with great volume- managemen
t capability.
Karvy covers the entire spectrum of financial services such as stock broking, de
pository, participants, distribution of financial product- mutual funds, bonds,
fixed deposit, equities, insurance broking, commodities broking, personal financ
e advisory services, merchant banking & corporate finance, placement of equity,
IPOs, among others.

HISTORY OF ORGANIZATION
Karvy was started by a group of five chartered accountants in 1979. The partners
decided to offer, other than the audit services, value added services like corp
orate advisory services to their clients. The first firm in the group, Karvy Con
sultants Limited was incorporated on 23rd July, 1983. In a very short period, it
became the largest Registrar and Transfer Agent in India. This business was spu
n off to form a separate joint venture with Computershare of Australia, in 2005.
Karvy’s foray into stock broking began with marketing IPOs, in 1993. Within a few
years, Karvy began topping the IPO procurement league tables and it has consist
ently maintained its position among the top 5. Karvy was among the first few mem
bers of National Stock Exchange, in 1994 and became a member of The Stock Exchan
ge, Mumbai in 2001. Dematerialization of shares gathered pace in mid-90s and Kar
vy was in the forefront educating investors on the advantages of dematerializing
their shares. Today Karvy is among the top 5 Depositary Participant in India.
While the registry business is a 50:50 Joint Venture with Computershare of Austr
alia, we have equity participation by ICICI Ventures Limited and Barings Asia Li
mited, in Karvy Stock Broking Limited. For a snapshot of our organization struct
ure, please click here.
Karvy has always believed in adding value to services it offers to clients. A to
p-notch research team based in Mumbai and Hyderabad supports its employees to ad
vise clients on their investment needs. With the information overload today, Kar
vy’s team of analysts help investors make the right calls, be it equities, mf, ins
urance. On a typical working day Karvy:
• Has more than 25,000 investors visiting our 575 offices.
• Publishes / broadcasts at least 50 buy / sell calls
• Attends to 10,000+ telephone calls
• Mails 25,000 envelopes, containing Annual Reports, dividend cheques / advises, a
llotment / refund advises
• Executes 150,000+ trades on NSE / BSE
• Executes 50,000 debit / credit in the depositary accounts
MISSION AND VISION OF KARVY
MISSION STATEMENT OF KARVY:
An organization exists to accomplish something or achieve something. The mission
statement indicates what an organization wants to achieve .Karvy’s mission statem
ent is “TO BRING INDUSTRY, FINANCE AND PEOPLE TOGETHER”
Karvy act as an intermediary between industry and people. It work as an investme
nt advisor and helps people to invest their money ,same way Karvy helps industry
in achieving finance from people by issuing shares,debentures,bonds,mutual fund
s, fixed deposits.

VISION OF KARVY:
Company’s vision is crystal clear and mind frame very directed.”To be pioneering fin
ancial services company and continue to grow at a healthy pace, year after year,
decade after decade. Company foray into IT- enabled services and internet busin
ess has provided an opportunity to explore new frontiers and business solution;
to build a corporate that sets benchmark for others to follow.

ORGANIZATIONAL STRUCTURE

KARVY GROUP
Karvy has travelled the success route, towards building a reputation as an integ
rated financial service provider, offering a wide spectrum of services for over
20 years.
Karvy, a name long committed to service at its best. A fame acquired through the
range of corporate and retail services including merchant banking, mutual funds
, fixed income, equity investments, insurance, commodities to name a few. Our v
alues and vision of attaining total competence in our servicing has served as a
building block for creating a large financial enterprise.
The Karvy group of companies are:
Karvy stock broking ltd.:

A member of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and Hy
derabad Stock Exchange (HSE) offers a comprehensive range of services in the sto
ck market through the benefits of in-depth research on crucial market dynamics,
done by qualified team of experts. The company offers solutions that encompass a
wide spectrum of financial services/products.
1. Karvy Comtrade ltd.:

The company provides investment, advisory and brokerage services in Indian Commo
dities Markets. And most importantly, we offer a wide reach through our branch n
etwork of over 530 branches located across
390 cities.
2. Karvy insurance broking ltd.:

The company provides life and non-life insurance products to retail individuals,
high net worth clients and corporate. A major step towards being the most compr
ehensive personal finance advisor.

3. Karvy investors services ltd.:

Registered with SEBI as a Category I Merchant Banker and ranked among the top 10
merchant bankers in the country, the company has built a reputation as a profes
sional advisor in structuring IPO’s take over assignments and buy back exercises.
4. Karvy Computershare private ltd:

Karvy Computershare Private Limited is a joint venture between Computershare, Au


stralia and Karvy Consultants Limited - The first securities registry company to
receive ISO 9002 certification in India. Registered with SEBI as Category I Reg
istrar, is Number 1 Registrar in the country. Computershare, Australia, services
more than 75 million shareholders across 7000 corporate clients and makes its p
resence felt in over 12 countries across 5 continents.
KARVY is working as Capital Market Intermediaries. Stockbrokers are regulated by
SEBI [Stock-brokers and Sub-brokers] Regulations, 192. The stockbroker is a mem
ber of the stock exchange. Stockbrokers are the intermediaries who are allowed t
o trade in securities
SERVICES OFFERED BY KARVY
1) DEMAT Services:
Karvy is a depository participant with the national securities depository limite
d (NSDL) for trading and settlement of dematerialised shares.
Depository participant are described as an agent of depository. They are interme
diaries between the depositors and the investors. They can offer these services
only after obtaining a certificate of registration from SEBI.
2) Registrar and transfer agent:
In 1985, Karvy entered the registrar and share transfer business. Karvy has been
rated as India’s most admired registrar.
3) Investment product distribution:
Karvy is concerned with distribution of investment products like:
• Fixed deposits
• Bonds
• IPO
a) Fixed deposits:
Karvy is a dealer of 34 fixed deposit companies which includes companies from pu
blic sector, Non –banking finance companies, Housing finance companies and Manufac
turing companies.

b) Bonds :
Karvy deals with bonds from RBI saving bonds, NHB and REC.
c) IPO:
Karvy also provides services related to IPO (Initial public offer).Recently Karv
y released the IPO of SKS Microfinance.
4) Investment advisory services:
Karvy also provides investment advisory services.i.e, portfolio management servi
ces to high net worth individuals and corporate. It guides its investors to inve
st in right kind of funds for better return to its investors.
5) Merchant banking:
Merchant banking is a financial intermediation that matches entities that need c
apital and those that have capital. Hence they facilitate the flow of capital in
the market.
Karvy enjoys SEBI category I for merchant banking. Karvy offers the full spectru
m of merchant banking service beginning from identity the best time for an issue
to final stage of marketing.
6) Insurance:
Karvy is also a dealer of many private life insurance companies. At Ujjain branc
h, it is associated with the dealing of following companies like Tata AIG, Max B
UPA and the like.
7) Mutual fund services:
Karvy provides services to nearly 80% of the asset management services (AMC) acr
oss an extensive network of service centres with asset under service in excess o
f Rs.10, 000 crores.
8) Income tax enabled services:
Karvy provide income tax enabled services. It works as a TIN Facilitation centre
and provides the following services:
• Distribution of PAN Cards (Permanent account number).
• Distribution of TAN Cards ()
ACHIEVEMENTS OF KARVY
• Largest mobilizer of funds as per PRIME DATABASE.
• First ISO-9002 certified registrar in India.
• A category –I Merchant banking.
• A category – I Registrar to public issues.
• Ranked as “The most admired registrar” by MARG.
• Handled the largest ever public issue- IDBI.
• Handled over 500 public issues as registrar.
• Handling the Reliance accounts which accounts for nearly 10 million account hold
ers.
• First depository participant from Andhra Pradesh.

SWOT ANALYSIS
Strength:
• No.1 registrar and transfer agent of companies
• Strong communication network
• Employees are highly empowered.
Weakness:
• High employee turnover.
Opportunities
• Need to explore the rural and semi urban areas.
Threats:
• Increasing number of local players.

INTRODUCTION
FINANCIAL INSTRUMENTS:
In simple terms Financial Instrument is either cash; evidence of an ownership in
an entity or a contractual right to receive or deliver, cash or another financi
al instruments.
Financial Instruments are legal documents that embody monetary value. There are
a number of different types of documents that are properly identified as financi
al instruments. In today s financial marketplace, financial instruments can be
classified generally as equity based, representing ownership of the asset, or de
bt based, representing a loan made by an investor to the owner of the asset. For
eign exchange instruments comprise a third, unique type of instrument
They are broadly categorized under two heads. They are as follow:

TYPES OF FINANCIAL INSTRUMENTS


Financial instruments are broadly categorised under two heads they are as follow
:
• Cash instruments:
This type of financial instrument is simply those documents that are recognized
as cash that can be utilized for various transactions.
Currency is the most easily identified of all cash instruments, although such do
cuments as checks or funds transfers from bank accounts would also be understood
to be a financial instrument of this type.
• Derivative instruments:
In broad terms, a derivative instrument is some type of contract that has value
based on the current status of the underlying assets.
This classification would include such instruments as future options, and swaps.
Some analysts also prefer to include stocks, bonds, and currency future within
this category.

FINANCIAL INSTRUMENTS (TRADITIONAL APPROACH)


We have seen the two categories of financial instruments. Now let us see the app
roaches of financial instruments. The approaches to financial instruments are:
• Traditional approach.
• Modern approach.
The traditional approach to financial instruments includes the traditional instr
uments which have been in the financial market for a long time. The financial in
struments taken into account are as follow:
• Insurance.
• Fixed deposits.
• Bonds.
• Kisan Vikas Patra.
• National saving certificates

INSURANCE

Insurance, in law and economics, is a form of risk management primarily used to


hedge against the risk of a contingent loss. Insurance is defined as the equitab
le transfer of the risk of a potential loss, from one entity to another, in exch
ange for a premium.
Insurer, in economics, is the company that sells the insurance.
Insurance rate is a factor used to determine the amount, called the premium, to
be charged for a certain amount of insurance coverage. Risk management, the prac
tice of appraising and controlling risk, has evolved as a discrete field of stud
y and practice.
SUM ASSURED:
It is the amount of money an insurance policy guarantees to pay before any bonus
es are added.
Factors included in the calculation of sum assured are:

• Date of birth.
• Gender.
• Duration.
• Health conditions.
• Job profile.
LIFE INSURANCE:
All policies are not the same. Some give coverage for your lifetime and others c
over you for a specific number of years.

Following are the different types of life insurances:


• Whole life
• Term policy
• Money back
• Endowment
• Pension plan
• ULIP
GENERAL INSURANCE:
General insurance typically comprises any insurance that is not determined to be
life insurance. It is called property and casualty (P&C) insurance in the U.S.
General insurance policies, including automobile, accidents and homeowner’s polici
es, provide payments depending on the loss from a particular financial event.

INSURANCE PRODUCT WITH WHICH WE DEALT AT KARVY:


• MAHA LIFE GOLD (TATA AIG).

MAHA LIFE GOLD (TATA AIG):


THE WHOLE LIFE PLAN

ABOUT TATA AIG:


Tata AIG Life Insurance Company Limited and Tata AIG General Insurance Company L
imited (collectively Tata AIG ) are joint ventures of the Tata Group and Americ
an International Group, Inc. (AIG). Tata AIG combines the strength and integrity
of the Tata Group with AIG s international expertise and financial strength.
• A joint venture between the Tata Group and American International Group
• Licensed to Sell: Feb 2001
• Started Operation: Apr 2001
• Head Office: Mumbai
• Accounting Year: April – March
• performance Year: April – March
• Percentage of Company Holdings = AIG – 26
As Tata AIG Life grew, the logo evolved to represent its
Commitment to customers and its focus on path breaking products
To meet customer needs.
This gave birth to a New Corporate Identity A new look at life‘

ABOUT PRODUCT:
TERMS:
Term mean the time period of policy and Maha life gold of Tata AIG for year.

1* 5* 6* 10* 11*
15*
*= YEARS
SUM ASSURED: 1 lack – no limit
AGE CRITERIA: 0 to 60

PREMIUM RATES (Rs.1, 00,000.)


FOR INDICATED SUM ASSURED
ISSUE
AGE ANNUAL SEMI
ANNUAL
0-35 9150 4667
36-45 9200 4692
46-50 9250 4718
51-55 9300 4743
56 9428 4808
57 9508 4849
58 9603 4898
59 9699 4964
60 9836 5016

1 2 3 4
1ST YEAR – 5TH YEAR =
1ST PREMIUM (for 36-39) = 9,200rs
Total premium in 4year = 9,200*4
Total premium in 4 year = 36,800
6 7 8 9 10
6th year - 10th year =
6th year premium = 9,200
Total premium in 5 year = 9,200*6
Total premium in 5 year = 55,200
After 5 year there is a provision of 3% flexible per annum dividend on sum assur
ed.
Calculation:
= 1,00,000*3/100.
= 3,00,000/100.
= 3,000 PER YEA

TOTAL INTREST IN 6 YEAR=


5TH* 6TH* 7TH* 8TH*
9TH* 10th * 15

* = YEAR
TOTAL INTREST IN 5 YEAR= 18,000
10th year - 15th year =
11th* 12th* 13th* 14th* 15th*

* = YEAR

7th year premium= 9200


Total premium in 5 year = 9200*5
Total premium in 5 year = 46,000

ONWARD 15 YEAR TILL POLICY HOLDER’S DEATH HE RECEIVE


FLEXIBLE INTRESTED: 10%
GURANTEED INTRESTED: 5%
TOTAL: 15%
CALCULATION:
10%
= 1,00,000*10/100
= 1,00,00,00/100
= 10,000rs per year 5%
= 1,00,000*5/100
= 5,00,000/100
= 5,000rs per year
TOTAL= 10,000 + 5,000
= 15,000 Rs
Suppose if Mr A person take a policy when he was 35 year old. His premium is com
pleted at 50 year. After 50 year he was died when he was 80 year old then he was
get…….
TOTAL AMOUNT MR. A RECEIVED
Calculation:

AGE
TOTAL
INVESTMENT
TOTAL
INCOME
35-39 46,000 -
40-45 46,000 18,000
46-50 46,000 55,000
50-80 - 4,50,000
AT THE TIME
OF DEATH 1,00,000
TOTAL
1,38,000
6,30,000
The benefit of this policy that policy holder only have to pay the premium only
for 15 year and he receive benefit for long period of time.

NATIONAL SAVING CERTIFICATE (NSC)


National saving certificates are popularly known as NSC.It is a time tested tax
saving instruments that combines adequate returns with high safety. These certif
icates are available at all post offices across India. . A large chunk of middle
class families use NSCs for saving on their tax, getting double benefits. They
not only save tax on their hard-earned income but also make an investment which
is sure to give good and safe returns.
FEATURES OF NATIONAL SAVING CERTIFICATE:
How to invest:
One can invest in any head post office/sub post office.
Who can invest:
• An adult in his own name or on behalf of a minor,
• A trust,
• Two adults jointly.
Minimum Purchase Value:
The minimum amount of investment under NSC is Rs 100/-
Maturity of National Savings Certificate:
Period of maturity of a certificate is six Years.

Nomination / Transferability:
• Nomination facility is available.
• Certificates can be transferred from one post office to any other post office.
• Transfer from one person to another person permissible in certain conditions.
Denomination :
• Certificates are available in denominations (face value) of Rs. 100, Rs.500, Rs.
1000, Rs. 5000 & Rs. 10,000.
Interest/maturity value :
• Interest is available on this scheme @ 8%, compounded half-yearly
• Interest accrued on the certificates every year is liable to income tax but deem
ed to have been reinvested.
Income Tax relief :
• Income Tax rebate is available on the amount invested and interest accruing ever
y
year under Section 88 of Income tax Act, as amended from time to time. [under Se
c 80C]
• Income tax relief is also available on the interest earned as per limits fixed v
ied section 80L of Income Tax, as amended from time to time.

KISAN VIKAS PATRA


Kisan Vikas Patra (KVP) is a saving instrument that provides interest income sim
ilar to bonds. Amount invested in Kisan Vikas Patra doubles on maturity after 8
years & 7 months. Some people have a misconception that only a farmer can invest
money in Kisan Vikas Patra. However, it is absolutely false. Anyone wishing to
invest money at safe places can go for Kisan Vikas Patra.
FEATURES OF KISAN VIKAS PATRA:
How to invest:
It is an easy way to invest in KVP.One can invest in any head post office/sub po
st office in cash, demand draft or local cheques.
Who can invest:
• An adult in his own name or on behalf of a minor,
• A trust,
• Two adults jointly.
Denominations:
Kisan Vikas Patra is available in the denominations of Rs 100, Rs 500, Rs 1000,
Rs 5000, Rs. 10,000 and Rs. 50,000. There is no maximum limit on purchase of KVP
s.
Who is not Eligible:
• Commercial Companies and institutions are not eligible to purchase KVP.
• NRIs and Hindu Undivided Families cannot purchase Kisan Vikas Patra.
Maturity:
• Facility of reinvestment on maturity.
• Maturity proceeds which are not drawn are eligible for Post office Savings accou
nt interest for a maximum period of two years.
Nomination/transferability:
• KVPs are transferable to any Post office in India.
• KVPs can be transferable from one person to another person before maturity.
• Nomination Facility is available in case of KVPs

Income tax relief:


No income tax benefits available are under KVPs.

BONDS
Meaning of Bonds:
A Bond is a debt security. When you purchase a bond, you are lending money to a
government, municipality, corporation, federal agency or other entity known as “is
suer”.
In return for that money ,the issuer provides you with a bond in which it promis
es to pay a specified rate of interest during the life of the bond and to repay
the face value of the bond (the principal)when it matures or comes due.
Bonds provide the borrower with external funds to finance long-term investments
, or, in the case of government bonds, to finance current expenditure. Certifica
tes of deposit (CDs) or commercial paper are considered to be money market instr
uments and not bonds. Bonds must be repaid at fixed intervals over a period of t
ime.

Features of Bonds:
Nominal, principal or face amount:
The principal is the amount at which issuer pays interest and which, most common
ly, has to be repaid at the end of the term.
Issue price:
Issue price is the price at which investors buy the bonds when they are first is
sued, which will typically be approximately equal to the nominal amount.
Maturity date:
The date on which the issuer has to repay the nominal amount. As long as all pay
ments have been made, the issuer has no more obligations to the bond holders aft
er the maturity date.
• Short term (bills): maturities up to one year.
• Medium term (notes): maturities between one and ten years.
• Long term (bonds): maturities greater than ten years.
coupon :
The interest rate at which the issuer pays to the bond holders. Usually this rat
e is fixed throughout the life of the bond.
Coupon dates:
The dates on which the issuer pays the coupon to the bond holders. In the U.S. a
nd also in the U.K. and Europe, most bonds are semi-annual, which means that the
y pay a coupon every six months.

FIXED DEPOSITS
WHAT IS A FIXED DEPOSIT?
A fixed deposit is meant for those investors who want to deposit a lump sum of m
oney for a fixed period; say for a minimum period of 15 days to five years and a
bove, thereby earning a higher rate of interest in return. Investor gets a lump
sum (principal + interest) at the maturity of the deposit.
Bank fixed deposits are one of the most common savings scheme open to an average
investor. Fixed deposits also give a higher rate of interest than a savings ban
k account. The facilities vary from bank to bank. Some of the facilities offere
d by banks are overdraft (loan) facility on the amount deposited, premature with
drawal before maturity period (which involves a loss of interest) etc. Bank depo
sits are fairly safer because banks are subject to control of the Reserve Bank o
f India.
FEATRURES OF FIXED DEPOSITS:
Bank deposits are fairly safe because banks are subject to control of the Reserv
e Bank of India (RBI) with regard to several policy and operational parameters.
The banks are free to offer varying interests in fixed deposits of different mat
urities. Interest is compounded once a quarter, leading to a somewhat higher eff
ective rate.
Minimum deposits:
The minimum deposit amount varies with each bank. It can range from as low as Rs
. 100 to an unlimited amount with some banks.
How to apply?
One can get a bank FD at any bank, be it nationalised, private, or foreign. You
have to open a FD account with the bank, and make the deposit. However, some ban
ks insist that you maintain a saving account.
Returns:
The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, d
epending on the maturity period (duration) of the FD and the amount invested

Duration Interest rate (%) per annum


15-30 days 4 -5 %
30-45 days 4.25-5 %
46-90 days 4.75--5.5 %
91-180 days 5.5-6.5 %
181-365 days 5.75-6.5 %
1-2 years 6-8 %
2-3 years 6.25-8 %
3-5 years 6.75-8

INTRODUCTION TO THE PROJECT


A. Study and its objectives:
The project undertaken by me for the Karvy stock broking ltd. laid emphasis on f
inancial instruments with a special reference to traditional approach.
This project has been helpful in understanding the perception of investors. As t
he research which was b conducted helped me to interact with various investors f
rom different backgrounds.
The objectives of the study are as follow:
• To know the perception of investors towards the traditional financial instrument
s.
• Lead generation i.e., to identify potential clients.
• To find and analyze the market position of Karvy stock broking ltd. and their co
mpetitors in the Ujjain region.
• To find out the level of customer satisfaction of its customers.

B.The Sample:
In the project “Financial instruments (traditional approach), I have used “Pr
obability Sampling”. Probability sampling is also known as random sampling.
Sample size: 70 respondents
Sampling period: June 22, 2010 to august 3, 2010.
Sample place: Ujjain city.
As keeping in mind the objective of the study the sample size and sampling techn
ique was selected. Under this sampling technique, it was possible to include var
ious groups of investors within the limited span of time. Secondly it gave me am
ple opportunity to identify the potential customers for the company.
C. The tools:
1. For data collection
The task of data collection begins after a research problem has been defined pro
perly. I have used “Survey method” to collect the data.
I have used “structured questionnaire” for gathering information through contacting
respondent personally. Multiple choice questions are asked in the questionnaire
for data collection.
2. Data analysis
Data analysis is based on the data collected by way of questionnaire.

Name Address Phone No


JAWAHAR SANMUKHANI vinayak traders Ujjain 9406850540 - 0734-2564040
RUPCHAND SANDANI GOPAL AGENCY 9425431270/07342553020
RAMESH KUMAR TRIVENI MARKETING 9301625807/07342559967
RAMESH JAIN SURESH TRADERS 9407158041/07342554651
RAJENDRA AGRWAL SANJAY TREADING 9300613923/07342559870
LALCHAND JAIN M.KALURAM TREDARS 9827077123/07342554457
PARAS JAIN RUCHIN TREDARS 9827431640/07344014665
PRASHANT JAIN VARDHMAN SALES 9425452074/07342558189
SHRI RAM JHAMLANI K.K.INTERPRICE 9425985985/07342558035
PVITR JAIN DHARMESH TREDARS 9827530998/07342553802
RESHABH JAIN RESHABH TREDING 9893012787/07344011474
PUKHRAJ JAIN GANDMAL 9425195874/07342550871
KAMAL GANWAL SARAVGI TREDING 94250891160/07342554777
SATYANARAYAN AREN GURUKRIPA MIL 9425092323/07342561737
LAXMI AGRWAL M/S RAGHUNATH 9827270725/07342553824
MAHESH GOYAL AGRWAL TRADING CO. 9827013880/07344014243
RADHESYAM BHAVSAR SUPARI CENTER 9827227197
SURENDRA AGRWAL KESHAV TREDARS 9425379957/07342558418
VIDHYA JAIN M/R LADDU MAL 9993470939/07344010549
VINOD CHOPRA SINDICAT TREDARS 9893617040/07342552444
MAHENDRA AGRWAL SINGHAL CORPORATIO;N; 9425092362/07342552262
SURESH SUNMUKHANI HERANAND SELES 9827078900/07342553207
ASHOK JAIN ASHOK TEA CENTER 9425092268/07342550268
ARJUN MAHESHWARI YASH INTERPRICE 9827076021/07342554559
RADHARAMAN NAGAR RAMCHANDRA AND CO. 9424830303/07342554546
AMBALAL NAYAK AMBIKA TRADARS 9098800791/073440870006
ANIL AGRWAL M/S ANIL KUMAR 9827588822/07342554961
ABHAY KUMAR JAIN RAJENDRA TREADARS 9425332310/07342553804
ASHOK HARINARAYAN M/S MANGILAL 9424877812/07342555835
BRIJMOHAN RATHI M/S BALKISHAN RATHI 9425918068/07342556282
CHANDRABHAN RAJDEV M/S NANDLAL 9424892074/07342557045
ABDUL SATTAR UNITED TRADERS 9300736082/07342550883
OMPRAKESH AGRWAL OMPRAKESH & CO. 9425918251/07342550710
ARJUNDAS BHIMVANI TULSI TRADERS 990701881/07342550623
ASHOK GARG LAXMI BASEN MIL 9827084155/07342552176
AJAY VADVANI SHANKAR DAL MIL 9907021821/07342553991
AJAY ROHARA A.K.TRADERS 9669999994/07342570179
GHANSYAM DAS M/S NARENDRA KUMAR 9827314814/07342560028
HARISH SANMUKHANI HARISH BROTHERS 9424891861/07342555721
CHAMPAK SIROLIYA CHAMPAK & SANS 9893037770/07344012516
CHANDRA KUMAR GURNANI GANESH TREDARES 9827579969/07342555230
DEEPAK MEDATWAL NAVDEEP AGENCY 9425092127/07342554506
BHAGWAN DAS KUMAR BROTHERS 9425195695/07342551241
DHANRAJ MANGAL MANGAL INDUSTRES 9425458986/07342559657
GURDEEP SINGH SUNEJA M/S MATHURADAS 9329423320/07342552286
HARISH JHAMNANI ROCHA SENG 9926081357/07342552328
JAIN KUMAR CHANDRA TRADING 9425091613/07342552838
JAY KISHAN VASWANI HARIOM TRADERS 9827277820/07342550793
JAY PRAKESH RATHI M/s JAYPRAKESH 9425195934/07342550602
HERALAL JEETVANI M/s TEKCHAND 9425431322/07342552149
LAXMAN VADWANI SIDHI TRADERS 9770017759/07342563990
MANOJ KUMAR TEJWANI MANOJ TRADERS 9893050147/07344060567
SUNIL KUMAR JAIN SHANTI SOBHAGYA 9424014880/07342552299
SHANKAR LAL KARMVANI 9826081361/07342550911
MAHESH MITAL M/s PRMOD KUMAR & CO. 9827080333/2554436
NANAK RAM DIMAND MARKETING 9425094045/07344041404
RAJENDRA KABRA KABRA BROTHERS 9926478725/07344011549
PARAS JAIN KALURAM SUNA 9827082242/07342561040
PRAMOD KANKARIYA POONAM TRADERS 9424879271/07342560821
RAMCHANDRA AHUJA SHEKAR TRADING C. 9425094586/07344040895
SHALENDRA PARMAR BALAJI MARKETING 9827036420/07342551564
SANJAY AGRWAL MYUR TREDERS 9827092911/07342557951
SURESH AGRWAL VISHVAS TRADING 9826817017/07344060181
STAYANARAYAN GUPTA M/s GUPTA ENTERPRICE 9406831133/07342551038
RAMCHANDRA JHAMNANI ANAND TREDERS 9425091288/07342560999
MUKESH SONGRA SHREERAM TEA 9425195746/07342551521
SHELESEH KALVIDIYA H.C.INTERPRICE 9424747474/07342551310
SANJAY AGRWAL SANJAY TRADEING 9826244511/07342552214
SHANKAR LAL M/S HERANAND 9424893394/07344040411
SANJAY GARG R.R.TREDARS 9425094584/07342552704
SUSHIL KAPOOR GURU TRADERS 9407125002/07342555157

RESULTS AND INTERPRETATION


After conducting the research I came to know that Karvy stock broking ltd has a
monopoly in the market as the registrar of the companies in the stock exchange.
The key finding of the study is summarized in the following points:
• The perception of an investor depends on his or her financial position.
• Most of the small businessman is interested in making his or her investments in
insurance sector. While few of them are interested in investing in share market.
• Most of the service class people were found to be interested in insurance and mu
tual funds.
• Nearly about 90 % of respondents like to invest in government companies. Only 10
% of respondents showed interest in private companies.
• Only 40% of respondents were having DE-MAT A/c.
• The motivating factor for an investor, which makes him or her to invest in finan
cial instruments, is profit (return on investment).
• In Ujjain city, Arihant capital is a stiff competitor of Karvy stock broking ltd
.
• Karvy need to focus on marketing as it was found that 15% of the respondents nev
er heard the name of Karvy.

LIMITATIONS
The sample extent for research is only Ujjain city.
Due to limitation of time and cost constraint a sample size of 70 respondents we
re chosen.
Some of the respondents denied furnishing any information.

Q.1.Which investment option you prefer the most?

Data interpretation:
Majority of respondents (43%) prefer insurance as a better option for investment
. While 29% prefer share market as their investment option.11% go for fixed depo
sits, 9%bonds, 6% national saving certificates and 3%respodents go for Kisan Vik
as Patra.

Q.2.What is the purpose of your investment?

Data interpretation:
The basic purpose of an investor is saving. About 43% of the respondents agree t
o this fact. While 29% of respondents go for tax benefits.21% respondents for pr
ofit and 7% for risk cover.

Q.3.Do you invest in share market?

Data interpretation:
Nearly about 57% of the respondents invest in share market. While 43% of the res
pondents don’t want to invest in share market.

Q.4.Do you have a Demat account?

Data interpretation:
In Ujjain, 36% of the respondents have a Demat account. 64% of the respondents d
on’t have a Demat account.

Q.5.In which companies you has your Demat account?

Data interpretation:
50% of the respondents had their Demat account in Karvy stock broking ltd.29% in
Arihant capital and 14% respondents in indo-Thai securities. While the remainin
g 7% in share khan.

Q.6.What is your broking charges?


Data interpretation:
About 43% of the respondents said that they were charged 0.03ps (intraday) and 0
.30ps (delivery).while 57% of the respondents were charged 0.05ps (intraday) and
0.50ps (delivery).

Q.7.Do you know about the annual maintenance charges of your broking firm?

Data interpretation:
It was found that majority of the investors are not aware of the annual maintena
nce charges (64% of respondents).36% of the respondents are aware of their annua
l maintenance charges.

Q.8.Are you satisfied by the services of Karvy stock broking ltd.?

Data interpretation:
79% of the respondents are satisfied by the services rendered by Karvy.21% of th
e respondents are not satisfied by Karvy.

Q.9.In which sector you prefer to invest your money?

Data interpretation:
29%of the respondents prefer to invest in private sector or company. Remaining 7
1% prefer to invest in public sector or company.
Q.10.What is the most important thing that you keep in mind while investing in s
hare market?

Data interpretation:
57% of the respondents keep in mind the risk associated with the investment. Whi
le 43% respondents keep in mind the returns which they will get after investment
.

Q.11.Do you have a medical claim policy?

Data interpretation:
Only 7% of the respondents have medical claim policy. Majority of the respondent
s i.e. 93% of the respondents don’t have medical claim policy.

Q.12.In which companies you has your insurance?

Data interpretation:
In Ujjain 86% of the respondents have LIC insurance plans i.e.LIC is the major p
layer in the insurance sector.9% of the respondents have insurance plans of Baja
j Allianz and 6% respondents have policy of other companies.

Q.13.Do you know about Karvy?


Data interpretation:
About 79% of the respondents know about Karvy.21% of respondents don’t know about
Karvy.

SUGGESTION AND CONCLUSION

There is a high potential market for Karvy stock broking ltd. in Ujjain, but thi
s market needs to be explored as investors (15% of respondents) are unaware of K
arvy stock broking ltd.
In Ujjain, investors have inadequate knowledge about financial instruments, so t
he company needs proper marketing of all their services advertising, distributio
n of pamphlet, arranging seminars etc.
Last but not the least, the point which Karvy should keep in mind is to get invo
lved in aggressive marketing. It has optimum resources and these resources need
to be channelized in a more efficient manner.

QUESTIONNAIRE
Name:
Address:
Age:
Contact no.
Q1.Which investment option you prefer?
Ans.Insurance Share market
Fixed deposits Bonds
National saving certificate Kisan Vikas Patra

Q2.What is the purpose of your investment?


Ans.Saving Tax benefit
Profit Risk cov
er
Q3. Do you invest in share market?
Ans.Yes No

Q4.Do you have a de mat account?


Ans.Yes No

Q5. In which company you have your de mat account?


Ans.Karvy stock broking ltd.
Indo Thai securities
Arihant
Share khan
Q.6.What is your broking charges?
Ans. 0.03-0.30 paisa
0.05-0.50 paisa
Q.7.Do you know about the annual maintenance charges
Your broking firms?
Ans.Yes No
Q.8.Are you satisfied by the services of Karvy stock broking ltd?
Ans.Yes No

Q.9.In which sector you prefer to invest your money?


Ans.Private sector
Public sector
Q.10.What is the most important thing that you keep in mind while investing in s
hare market?
Ans.Risk
Return
Q.11.Do you have a medical claim?
Ans.Yes No
Q.12.In which companies you has your insurance?
Ans. LIC
Baja Allianz
Others
Q.13.Do you know about Karvy?
Ans. Yes
No

BIBLIOGRAPHY
• http://www.karvy.com/v2/aboutus.aspx
• http://www.karvycomputershare.com
• http://www.karvy.com/v2/websites/kisl/registry
• http://www.karvy.com/v2/institutional/broking/aspx
• http://www.thefinapolis.com/v2/bondsFDs/bonds_FDs.asp.
• http://www.karvyglobal.com
• http://www.thefinapolis.com/v2/achievement.asp
• http://en.wikipedia.org/wiki/financial_instrument.
• http://www.investopedia.com/terms/f/financialinstrument.asp
• http://en.wikipedia.org/wiki/insurance
• http://www.investinginbonds.com/learnmore.asp?catid=46&id=2

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